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Bommareddi Mothireddi Vs. Bhimavarapu Pothireddi - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtAndhra Pradesh High Court
Decided On
Case NumberCivil Revn. Petn. No. 1288 of 1959
Judge
Reported inAIR1963AP343
ActsNegotiable Instruments Act, 1881 - Sections 8, 50, 78 and 82
AppellantBommareddi Mothireddi
RespondentBhimavarapu Pothireddi
Appellant AdvocateA.V. Krishna Rao, Adv.
Respondent AdvocateP.L.N. Sarma, Adv. for ;R. Rajeswararao, Adv. and ;M. Venkata Rao, Adv.
DispositionRevision dismissed
Excerpt:
.....sections 8, 50, 78 and 82 (c) of negotiable instruments act, 1881 - petitioner executed promissory note - endorser of note endorsed it to respondent - respondent filed suit and after that endorser died - petitioner pleaded suit abated by reason of death of endorser - revision petition filed before high court - high court observed right based on endorsement survives notwithstanding death of endorser - endorsement made for specific purpose - collection of amount valid till such purpose served - held, respondent entitled to payment on promissory note. - - 1. the problem that poses itself before me in this civil revision petition is an interesting one and impinges on the effect of the death of the endorser of a promissory note on a suit instituted by the endorsee for collection on the..........is an interesting one and impinges on the effect of the death of the endorser of a promissory note on a suit instituted by the endorsee for collection on the basis of the promissory note.2. the defendant in s. c. no. 373 of 1958 on the file of the additional munsif-magistrate tenali, is the petitioner before me. he executed, a promissory note on 26-7-1956 in favour of one konda chellamma for rs. 250/- payable with interest at nine per cent per annum. chellamma endorsed this promissory note in favour of the respondent for collection. after the institution of the suit by the respondent, the endorser, chellamma, passed away. thereupon, the petitioner pleaded that the suit has abated by reason of the death of the endorser which has resulted in the termination of the authority of the.....
Judgment:
ORDER

P. Chandra Reddy, C.J.

1. The problem that poses itself before me in this civil revision petition is an interesting one and impinges on the effect of the death of the endorser of a promissory note on a suit instituted by the endorsee for collection on the basis of the promissory note.

2. The defendant in S. C. No. 373 of 1958 on the file of the Additional Munsif-Magistrate Tenali, is the petitioner before me. He executed, a promissory note on 26-7-1956 in favour of one Konda Chellamma for Rs. 250/- payable with interest at nine per cent per annum. Chellamma endorsed this promissory note in favour of the respondent for collection. After the institution of the suit by the respondent, the endorser, Chellamma, passed away. Thereupon, the petitioner pleaded that the suit has abated by reason of the death of the endorser which has resulted in the termination of the authority of the plaintiff to continue the suit.

We are here unconcerned with other defences as nothing turns upon them and as the arguments addressed by the learned counsel for the petitioner bear only on the effect of the death of the endorser of the promissory note.

3. This objection of the defendant did not find favour with the trial Court with the result the suit was decreed as prayed for.

4. In this revision petition, it is this view of the Munsif-Magistrate that is challenged by the learned counsel for the petitioner. The contention advanced by Sri A.V. Krishnarao is that since the relationship between the endorser and the endorsee for collection could be equated to that of principal and agent, this jural relations ceased with the death of the endorser with the consequence that the endorsee could not continue the suit and it is only the legal representatives of the endorser that could continue it. I find it difficult to accede to this proposition.

5. A perusal of the relevant sections of the Negotiable Instruments Act (XXVI of 1881) would enable me to reject this contention. Section 8 of the Act in so far as it is relevant for this enquiry recites:

'The 'holder' of a promissory note, bill of exchange or cheque means any person entitled in his own name to the possession thereof and to receive or recover the amount due thereon from the parties thereto. X X X X

6. It is plain that the endorsee of a promissory note who is the holder of the document, could maintain the action in his own name for the purpose of recovering the amount due thereon.

7. I shall now turn to Section 50 which is pertinent in this enquiry. It recites:

'The indorsement of a negotiable instrument followed by delivery transfers to the indorsee the property therein with the right of further negotiation; but the indorsement may, by express words, restrict or exclude such right, or may merely constitute the indorsee an agent to indorse the instrument, or to receive its contents for the indorser or for some other specified person.'

This section postulates that the title in the document passes to the endorsee. But when the endorsement is retricted to the receipt of the contents, the endorser will continue to be the beneficial owner thereof and the endorsee is liable to account for the former. The fact that it was a restrictive endorsement would not make any difference so far as the legal title of the endorsee in the note is concerned. The endorsement clothes the endorsee with the right to lay the action on the foot of the promissory note, (sic) collect the amount though he has to make over the proceeds after the collection. Since the effect of the endorsement is to vest the transferee with the right of the transferor, the death of the endorser would not put an end to the right of the transferee to continue the suit.

8. I shall next extract Section 78, which throws light on this enquiry,

'Subject to the provisions of Section 82, clause (c) payment of the amount due on a promissory note, bill of exchange or cheque must, in order to discharge the maker or acceptor, be made to the holder of the instrument.'

This section emphasises the liability of the maker of the document to make the payment to the holder of the document. Indisputably, the endorsee for collection is the holder of the document.

9. Section 82(c) does not contain any concept which is in cons in tent with the right of the holder of the instrument. That only deals with the discharge of parties from liability on the instrument. That section recites:

'The maker, acceptor or indorser respectively of a negotiable instrument is discharged from liability thereon.

X X X X (c) to all parties thereto, if the instrument is payable to bearer, or has been indorsed in blank, and such maker, acceptor or indorser makes payment in due course of the amount due thereon.''

10. Thus payment to the holder of the instrument, which includes an endorsee for collection, gives a discharge to the maker of the promissory note. That being the real position, in my view, the right based on the endorsement survives notwithstanding the death of the endorser and the endorsee could continue the suit. The endorsement having been made for a specific purpose, namely, collection of the amount, it will be valid till that purpose is served.

11. This opinion of mine receives confirmation from the judgment of the Lower Burma Chief Court in Ramzan Ali v. Vellasami Pille, 81nd Cas 967. A single Judge of that Court rules that the promissory note being negotiable, the endorsement followed by delivery passed the property to the endorsee and he became holder of it and that, therefore, the payment had to be made to him. It must be mentioned here that in the cited case also the endorser died subsequent to the endorsement.

12. It is unnecessary for me to pursue this topic any further. Suffice it to say that the death of the endorser has not brought about any change in regard to the right of the plaintiff to continue the suit. It follows that the conclusion of the trial Court in this behalf cannot be impugned.

13. In the result, the decree of the trialCourt is affirmed and the civil revision petition isdismissed with costs.


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